Abstract: Insulin resistance of skeletal muscle in humans, animals, and cells is often strongly correlated with increased lipid availability. The elevation of certain intracellular lipid species can lead to the activation of signal transduction pathways that inhibit normal insulin action. Thus, increased diacylglycerol levels in muscle are associated with the activation of one or more isoforms of the protein kinase C family, which is known to attenuate insulin signaling, especially at the level of IRS‐1. In addition, de novo synthesis of ceramide can inhibit more distal sites by the activation of protein phosphatase 2A and hence promote the dephosphorylation and inactivation of protein kinase B. Such mechanisms may account at least in part for the reduced insulin sensitivity occurring in obesity and type 2 diabetes where lipid oversupply is a major factor.